The Registrar of Companies issues a Certificate of Incorporation upon incorporation of the Company, confirming its existence. Once a company’s name is entered into the register, it cannot be deleted until the company requests it either by following procedure for Strike off of OPC or it is done automatically. When a company fails to open for business or fails to file yearly returns, the registrar of companies has the authority to suo moto strike off the company by delivering a notice to the company at its registered office address.
Due to a variety of reasons, businesses must occasionally close. For the purposes of starting, operating, and shutting down a firm, Specific procedure for Strike off of OPC must be followed.
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What is One Person Company?
A One Person Company (OPC) is a business that can be established with just one member. The OPC is a hybrid business structure that combines the benefits of a private limited company with a sole proprietorship. The main goal of OPC is to give small business owners and entrepreneurs who desire to run their enterprise as a corporation a legal identity without the requirement of additional shareholders. And Sometimes situation arises that person can.
Reason for closing OPC Company?
The primary Reason for closing OPC Company is that it has to follow several rules, such as appointment of auditors and regular filing of income tax and annual returns. Non-compliance could result in the company facing fines or directors losing their jobs. If these are the main reasons then it is right to closure of OPC Company. A one person company can be dissolved for many reasons other than bankruptcy. Causes may include both internal and external factors. If the company wants to dissolve a non-compliant One Person Company, it will have to spend a huge amount on annual pending compliance and standard audit files to maintain its status as a legal organization. Additionally, executing the procedure for strike off of OPC facilitates the resolution of outstanding compliance issues and contributes to a smooth OPC closure procedure.
Methods of Closure of OPC under Companies Act 2013:
There are two methods of Closure of OPC under Companies Act 2013 –
- A meeting may be called to complete this form of winding up. A majority of the creditors present at the meeting, or 2/3 of them, must vote in favour of the winding up for it to take effect.
- The minutes of the general meeting and the approval of the winding up by the shareholders must be subsequently registered in the commercial register with an application.
- The lengthy winding up OPC closure procedure requires the appointment of a liquidator to oversee the operations of the closed business.
Strike off OPC:
- A less complex method of closure of OPC Company is to employ a Fast Track Exit (FTE) strategy to closure of OPC under companies act 2013.
- When an OPC is classified as a dormant business, it is possible to liquidate it fast using the STK-2 form and the Fast Track Exit (FTE) OPC closure procedure.
- OPC Strike off request should be submitted using Form STK 2 along with necessary supporting materials and Rs. 5000 filing fee.
Two Types of Strike Off:
Voluntary Strike off –
In this situation the directors dissolve the company to remove it from the register. When a director resigns from the board without any valid reason, the corporation is dissolved. There may be other justifications for dissolving a firm, such as retirement of directors or focus on a different project.
Mandatory Strike off –
There is a third party involved in this situation. A petition for compulsory dismissal of a corporation shall be signed by a third party. The Registrar of Companies Company can also take action when a business does not comply with laws and regulations and does not submit annual accounts and financial statements. By publishing a notice in the Gazette, they are required to inform all concerned about the strike of the one person company (OPC). The notification has an objection period of two months from other parties. On expiry of the time limit, the name of the Company will be removed and it will cease to exist.
Eligibility for closing OPC Company:
According to the Companies Law, a Company is ineligible for strike off in the following situations:
- The Company was formed after November 2nd, 2018, but no 20A has been filed.
- It has not been one year since incorporation.
- For a continuing business, meaning one that has had transactions within the last two years.
- DIN is deactivated.
- Director is disqualified.
- Any current litigation has not yet been resolved;
- The company has already received notice from ROC that it has been struck off.
Documents for Closing OPC Company in MCA
Following are the documents required for closure of company –
- Acceptance by the Company’s Creditors
- A valid indemnity bond (in Form STK 3) signed by Director
- A Chartered Accountant-certified statement of liabilities listing all assets and liabilities of the companies
- A Form STK 4 affidavit signed by Director
- Aadhaar and PAN card of Director
- Director’s Affidavit and Letter of Consent
OPC Closure Procedure
Following are procedure for closure of OPC –
- Filing applications: STK-2 form should be used to submit the application to the Registrar of Companies (ROC) along with all the necessary supporting documents for deletion of OPC.
- Verification of documents: After the application is submitted, the Registrar of Companies (ROC) will scrutinize the supporting documents.
- Notice issued by the ROC: The ROC will next issue a statement informing the public about the OPC strike and asking about any protests or objections, if any, to the statement.
- Strike off OPC: Once all the steps have been followed and no objections are raised, the Registrar will deregister the OPC and delete its name.
- Publishing a Notification: The Official Gazette will publish a notice announcing the dissolution and termination of the OPC.
The above article discusses the procedure for strike off of OPC in India. For any queries regarding the strike off OPC in India, you can consult our professionals at BestTaxInfo. Our professionals will help you in every stage of the procedure for closure of OPC.